One of the ways we can build wealth is through Real Estate, while you need money to invest in real estate, most people have the misconception that you must invest very heavily before making huge returns in real estate.
The truth is, there are lots of way you can make cool money out of the real estate industry even though you don’t have lots of money to invest, all you need is being creative and calculative.
We’ve arranged some practical strategies that if you make use of them, you might just be on your way to financial freedom through real estate.
Why You Should Invest in Real Estate.
There are lots of reasons why you definitely need to consider investing in real estate, some of them are listed below
- Steady Cash Flow: If for example you have a rental property as a real estate investor, it means from time to time you’ll receive income from your tenants which is a very good reason to Invest in real estate.
- Appreciation: Another reason why people Invest in real estate is the fact that most real estate properties generally appreciate with time instead of depreciating. When the value of properties appreciates, it only points to one thing, which is more income.
- Tax Benefits: If you are a real estate investor, it’s very easy for you to benefit from deductions like taxes from your properties, mortgage interest and even depreciation. The tax benefit is just so enormous.
- Leverage on Leverages:This is another reason that most people often overlook, in real estate, you can borrow money, use it to buy properties, this will give you the opportunity to control more assets notwithstanding the fact you have less cash upfront.
Proven Strategies you can use for Investing in Real Estate with Little Money
Like we said earlier, you don’t need all the money in the world before venturing into real estate, there are some strategies you can use when you don’t have enough money, these strategies are already Proven to work, so I don’t see any reasons why it won’t work for you.
1. House Hacking
A lot of people who aren’t really buoyant financially have gained their ground in real estate by using the House Hacking method.
Now house hacking in simple terms involves buying a property, living in one part of the property and renting out the rest to tenants.
If you decide to acquire a multi-family homes like duplex or triplex, this strategy is advantageous for you.
- How It Works:
- You can use a low-down-payment loan, you should try an FHA loan, they only need as little as 3.5% down.
- You should then rent out the extra units or rooms so as to cover your mortgage and other expenses that you might incur.
- Benefits:
- One of the major benefits is that you can easily reduce your housing costs while at the same time you are building equity.
- It will also teach you all the basics that are involved in property management.
2. Partner with Others
Partnership in real estate is criminally underrated, if you don’t have money to invest on your own, you can look at your friends, family members or investors and team up with them.
- How It Works:
- For a start, you and your partner will have to pull funds together and purchase the property
- When profit starts coming in, you can share it amongst yourselves based on your agreement with them
- Benefits:
- Once you are teaming up with other investors, it means there’s enough resources and it will be very easy for you to buy even larger properties thereby making more money in the process.
3. Real Estate Investment Trusts (REITs)
A lot of folks I know are going through the REITs route, trust me they are flourishing here too. REITs are companies that own and also manage real estate properties.
These companies are in charge of big shopping centers, apartments, etc. If you are investing in REITs, it is like buying stocks, but in this scenario the focus is on real estate.
- How REITd Works:
- You will have to purchase shares of a REIT through a brokerage account.
- Once dividends start coming, you can earn good income through dividends, if the value of the property appreciates, that’s more income too..
- Benefits:
- One of the major benefits is the fact you really don’t need a lot of money to start some REITs can even allow you to invest as low as $100.
4. Wholesale Real Estate
Most Investors who are not really wealthy also capitalize on wholesaling. Wholesaling is all about finding properties that are on discounts, getting them under contract as soon as possible and then selling the contract off to another buyer for a higher price.
- How It Works:
- The major task here is to find a desperate seller who is willing to sell their property below market value.
- Try to secure the property with a contract as soon as possible.
- You can go ahead to sell the contract to an investor for a bigger fee.
- Benefits:
- You don’t need to own or renovate properties, you buy on a cheaper rate from those who desperately want to sell.
- If you would be able to do wholesaling correctly, then you just have to pay little or no upfront payment.
5. Rent Out Part of Your Home
This might sound somewhat, but you can actually start investing in real estate by renting out a spare room in your house or a portion of your property. That way you’ll be able to make money from your tenants.
- How It Works:
- You can use platforms like Airbnb or Vrbo to list your space for short-term rentals.
- You can project long-term rental options for tenants if that’s their choice.
- Benefits:
- A major benefit is the fact you don’t need to buy a new property before earning income.
Final Thoughts
We’ve been able to guide you through on how you can leverage on real estate without having much money. We listed some strategies that have worked and are still working.
It’s left for you to assess your financial situation and pick either of these strategies that you feel might work better for you.